The World Bank’s country policy and institutional assessment (CPIA) rating is conducted annually and one of the factors that determine how much money each country is granted. Ethiopia performed best in its economic management, writes TAMRAT G. GIORGIS, FORTUNE STAFF WRITER.

WB Rating Slams Ethiopia’s Gender Inequality

Country fares above average but stands lower than its peers in region

The World Bank has made public its annual assessments of the policies and institutional qualities of member countries eligible for grants from the International Development Association (IDA), an organisation in the World Bank Group.

Known as Country Policy and Institutional Assessment (CPIA), the rating is conducted under the watchful eye of the chief economists of the regions. CPIA ratings constitute one third of the factors determining how much of the IDA’s annual seven billion dollars will go to each member country.

Apart from the CPIA ratings, the World Bank also considers factors such as a country’s population size and record of utilising grants, in deciding how much money to contribute to that country.

“We have only so much to give to all the countries under the IDA,” said Shantayanan Devarajan, chief economist of the World Bank for Africa region. “That is where selection comes [in]. But if we are to base our selection only on population size, India would take all the grants earmarked under the programme [and the] Maldives would get nothing.”

Seeing as countries with higher population sizes are constrained by their CPIA ratings, the Bank has a policy of not granting an amount of less than seven million dollars to any small country, according to the chief economist. However, many countries are in the middle of this matrix.

The CPI assessments are first compiled by a team of experts at a country level, before being sent to World Bank headquarters for review by chief economists from the six regions the bank is working in. Members of country teams always favour higher ratings for the countries they work on, according to the chief economist.

“[However], we want to look at policies not intended for implementation, but [which] are actually being implemented and bear results,” Devarajan told participants of the meeting.

The assessments are then sent to regional experts at the central departments who compare countries’ scores with each other. The final ratings, however, are decided at a meeting of experts from different regions, networks and central departments of the World Bank.

In 2004, the Bank reviewed the set of criteria used to judge countries; subsequently the criterion was downsized by four, to only 16. Moreover, the Bank’s management decided to begin disclosing these ratings on August 9, 2004.

For over four decades the World Bank has been very reluctant to disclose the content of these assessments. There were very few officials with access to these documents in the countries’ offices of the Bank, according to a staff member from the Bank’s office in Addis Abeba.

“It [was] a profound shift,” Devarajan said.

However, there appears to be a good reason for the Bank officials to have kept the assessments confidential seeing that many political leaders, whose countries are subjects of the review, do not like them.

Prime Minister Meles Zenawi, views the CPIA ratings as an ideological instrument of western neoliberals, interested only to impose the Washington Consensus, a list of policy manuals prescribed by the World Bank, including fiscal discipline, liberalisation of the financial sector, and privatisation.

Devarajan and his colleague had a three-hour debate with Meles in Addis Abeba in June 2009; they parted after agreeing to disagree, according to reliable sources. Their attempt to persuade Meles that aid works better in recipient countries where there are good policies in place and the institutions to implement these policies are strong did not fly high with him.

“He wants to be judged by the results his policies produce, not by the means that allow him to reach the end,” Devarajan told Fortune. This appears to be the message the Ethiopian government wished to send through its representative attending the meeting.

“We want the assessment to be more result orientated,” Hashim Ahmed, macroeconomic advisor to the government, told the meeting. “The results are what matter at the end. Look at how well we performed in meeting the Millennium Development Goals (MDGs).”

Meeting the MDGs does not stop the World Bank from passing judgment on the quality of a country’s policies and the strengths of its institutions. The latest judgment, for 2009, was revealed last week.

Ethiopia’s overall rating in the assessment, which comprises four categories and 16 sub-categories, stands at 3.4 points out of six. It is one decimal point above the average for countries borrowing from the IDA, but three decimal points lower than Kenya, and four decimal points below Rwanda and Tanzania.

Ethiopia performed best in its economic management, where it scored 3.7 points for its macroeconomic management and the quality of its fiscal and debt policies.

The lowest point, like most IDA borrowers, is registered in structural policies such as trade, the financial sector, and its business regulatory environment. Ethiopia’s rating of 3.2 points is lower than the average borrower by two decimal points.

The Bank’s assessment sees resource mobilisation by the Ethiopian financial sector as “modest and below potential,” and emphasises that long-term finance is unavailable from private banks.

“The coverage of [the] national land registration system is still not able to furnish the market with details of available land,” according to the assessment. “The use of land as collateral by investors is still not practical with banks as the market value of land is difficult to determine.”

However, none of the ratings were as controversial as the Bank’s conclusion on gender issues. Ethiopia’s social inclusion policies for gender equality scored three points, lower by four points from the average borrower and five points below Rwanda and Tanzania, although equal with Kenya.

“We are not happy with the rating on gender,” Hashim told Fortune. “Women’s empowerment and girls’ education take time, even generations.”

Hashim raises issues of women suffrage in the United States, which was enacted in 1960s.

“Even today, for every one dollar an American male makes, a woman gets only 72 cents,” he said. “Rating on gender ought to be taken within context of culture, history and laws.”

While the government is not happy about its ratings on gender equality, neither are delegates from non-governmental organisations.

The World Bank lacks acknowledging improvements made on the gender front and in areas of environmental protection, said Meshesha Shewarega (PhD), executive director for Christian Relief and Development Association (CRDA), the largest consortium representing 304 NGOs in Ethiopia.

The existence of laws that empower women and the enrolment of girls in elementary schools have increased, said Meshesha. By the bank’s own admission female participation in schools from first to eighth grades improved from 84pc in 2006, to 85pc the following year, and 91pc in 2009.

“So much has been achieved in bridging the gap over the past five years, and in meeting MDGs in areas of gender and health provisions,” Meshesha told Fortune. “All these have not been properly credited.”

These were the sort of acknowledgments that enabled Ethiopia to get the points it did. In their absence, its ratings, particularly compared to other countries, would have deteriorated further, Devarajan argues.

Despite these ideological objections, the assessment for 2009 is complete and has already contributed to the decision of the IDA to grant Ethiopia one billion dollars in loans in the current fiscal year.

The revealing and influential documents are available on the Bank’s website, www.worldbank.org